Car insurance premiums have risen 9.4 per cent in the 12 months to February and now sit at an average price of £661.

Tax increases along with a change to the way personal injury claims are calculated mean further increases are also expected.

Those in London and the North West are footing the biggest bills, with average premiums at £900.

Further insurance price rises are predicted due to IPT hikes and a change to the discount rate

The rate of increase to car insurance bills is four times faster than the rate of inflation over the same period, according to data from Consumer Intelligence.

In February 2017 the average car insurance price was £661 but this varied around the country.

Those in London and the North West had the highest average premiums, while drivers in Wales had the cheapest bills, at an average of £552 – which is still a yearly increase of 9.4 per cent.

The third most expensive bills were found in the North East, at an average price of £570 – a 10.2 per cent annual rise – followed by those in the East Midlands where average bills are £662, up 10 per cent.

Prices are rising at a slower rate of 7.8 per cent for younger drivers who typically pay the most for car insurance. This is largely due to the introduction of telematic technology which tracks how you drive and can offer rewards and lower premiums for consistently good driving behaviour.

However, the price paid by younger drivers, those aged between 21 and 24, is still significantly higher than it is for other drivers, at an average of £1,176 per year. This is compared to an average of £372 for those aged over 50 and an average of £647 for those aged between 25 and 49.

CAR INSURANCE PRICE RISES BY REGION

Region Average premium (based on the five cheapest) Yearly price rise to February North West £906 12.8% London £910 12% North East £570 10.2% East Midlands £662 10% Eastern £546 9.2% Scotland £490 8.9% Yorkshire & The Humber £662 8.3% South East £563 8.1% West Midlands £751 7.7% South West £496 7.6% Wales £552 7.5% UK average £661 9.4% Source: Consumer Intelligence

One of the main reason for the hike in bills is the Government’s rise to insurance premium tax. It first increased IPT in November 2015 pushing it up from 6 to 9.5 per cent and on 1 October 2016 it went up again to 10 per cent. On 1 June it will rise again to 12 per cent and the AA suggested these rises have added around £100 to the average premium.

IPT is applied to insurers by the Government but historically it has been passed onto consumers, in the form of higher premiums. It applies to most areas of general insurance but excludes travel insurance, which has its own tax at 20 per cent.

As well as IPT, a change on 20 March this year to the way in which payouts are calculated in severe personal injury cases is likely to push up insurance bills.

The discount rate changed from 2.5 per cent to minus 0.75 per cent and experts have predicted this could add £60 onto the average premium.

In severe personal injury claims after motor accidents, when a court decides how much money will be paid out, it uses this discount rate to decide how much interest the money would earn if it was invested.

The average car insurance bill is now £661 but £1,176 for drivers aged between 21 and 24

The calculation, also known as the Ogden discount, is designed to make sure claimants are not under or overpaid and it hadn’t been changed since 2001.

The change will mean insurers will have to pay out more on the assumption that victims of serious accidents will lose money on sums paid out every year.

The continual upwards trend of rising bills has led some insurers to warn of a rise in drivers not buying insurance. The AA said that more expensive insurance policies will only encourage people to take dangerous and illegal steps to save money, not least driving without insurance at all.

Edmund King, AA president, said: ‘Families with young drivers have resorted to ‘fronting’ – where the parent names themselves as the main driver on a vehicle when in reality the main driver is their child.

‘The actions of ‘fronting’ and driving uninsured mean that the rises in IPT backfire, as when collisions happen, both the Government and insurers are asked to foot the bill.’

The data from Consumer Intelligence was calculated by comparing 3,600 car insurance quotes. The AA’s data, which looks at 2,800 quotes, suggested a similar trend and in its latest British Insurance Premium Index it said prices had risen by 11.7 per cent in 2016.

John Blevins, Consumer Intelligence pricing expert said: ‘There are already signs that the discount rate ruling is having an impact on premiums and the next IPT rise in June will add to the pressure.

‘There were signs that price rises were levelling off but that is sadly no longer the case with all indications now that the only way is up.

‘With inflation running at 2.3 per cent it is clear that drivers, who have no choice over whether to buy insurance, are facing a squeeze on their budgets.’